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14 comments:
Citi sent me an offer for a 3.75% 10 yr.
I'm one of the lucky ones right now. 13 years ago I took out a 30-yr variable rate mortgage although it was a sensible one, not one of the 0% for 2 years or whatever. 5 years fixed at around 7% I think (can't remember the exact number).
Since it went variable, I've never payed more than the original fixed payment and now the interest rate is down at 3.2%.
That's luck, not planning, but the bank never got into the dodgy mortgage business so think that helped a lot, especially as back then I didn't really understand what I was getting into.
Tom
Well, the banks are getting the money from the Fed/Treasury printing press for zero, so 400 percent return is good for them. ( What do they know that you don't? )
Anyway...
16 Reasons Why California Is The Next Greece
It is all hocus pocus right now...demographics and economics are tied together along with realy bad policies out of DC....but you are getting down to the point that the interest payments may be less than your city/state/school/etc. taxes in a few years (if you have equity)...if it saves money it is worth looking at real hard.
I bought a house during the financial collapse of Fall '08. I could not find a loan at the time since it would not fit into a government backed program. I finally got a bank to make a loan that they kept in house on their own books, but they required that I put down over 50% on the house. The reason I could not qualify for government loans is because the property was over 10 acres and is a farm.
Now I am refinancing under new government rules for lending on more types of properties. Acreage is not an issue, there is no appraisal and no income verification. The only thing they care about is that I made every payment on time for the life of the current loan.
4.85% for 30 years.
Citi sent me an offer for a 3.75% 10 yr.
I have a fixed-rate thru CitiMortgage from way back in 2002... they have sent me two mailings offering 4.5% (roughly) refis, plus I get online offers whenever I make an online mortgage payment.
So I went to a branch and talked with a mortgage officer. I've never been late with a payment in 8 years, I've even pre-paid some extra in the past, and the offered re-fi would lower both the term of the mortgage (by about 9 months) *and* the monthly payment (by about $150).
I was summarily turned down solely because I've been self-employed for 5 years, and couldn't prove my income even through tax receipts. I tried to explain that someone who's never been late on a certain monthly payment would likely not be late on a payment 90% of that amount, but the guy wouldn't budge. In fact, the income requirements for obtaining the re-fi were more stringent than the requirements for obtaining the original mortgage in 2002, despite the fact that around 30% of the principal has been paid off over that time.
All of this took place around 6 months ago, but these banks need to use different algorithms depending on the nature of the re-finance. Utterly ridiculous.
Over the past two years, I have had problems getting car loans and a HELOC because...wait for it...I wasn't sufficiently risky.
My credit score's over 800, I have more than 75% equity in my house (the HELOC limit was for 25% of the value), and haven't been late on a mortgage or car payment ever (18+ years). Yet I was deemed not a worthy credit risk.
After several inquiries on what the problem was, I had a couple of the loan officers level with me. They were unlikely to make much in fees off of me. It was very unlikely that I would trigger a late payment or missed payment fee, default, or generate any income for them other than the interest. That just wasn't attractive enough for them, so no thank you, go borrow money somewhere else. They're looking for suckers they can get to go in over their head.
Banks have changed their business model. They no longer plan to simply make money off of the difference between the rate they can borrow at vs. the rate they lend to you. It's all about generating income via fees. It's far more interesting and lucrative to take advantage of people on the edge.
OK. You think 4 percent is a deal. And, of course it was, when the land was increasing five percent, or more, a year.
How is it now? Say four percent. But with land/house decreasing five percent. With a combined loss of 9 percent, a year.
Such a deal.
Paul that is a reason not to buy at this time...but two issues, one is if you own now and simply want to reduce your current interest rate and/or this is just a low cost loan vs another structure for obtaining capital, second is that a home is a life style choice as well as shelter (and not an alternative to a 401K) like buying a new pair of Nikes or a Jag for the wife...just one of many choices we make. But do agree 100% from an economic side that the true cost includes depreciation/appreciation over the long run.
Just finished a refi two weeks ago-- knocked $130/mo off my 20 yr, w00t!
And the best time to buy a house or refi is at ALL TIME low rates!
"Im talking about education to battle inflation!"
@getyourselfconnected, I think it is better to buy when the interest rates are high because they will go down over time and because house prices are pushed down by the high cost of financing. People buy as much house as they can based on whatever the payment is.
People buy as much house as they can based on whatever the payment is.
Not always so. There are entire cities where houses can not be given away. This zone sweeps, mostly from New Jersey, up the coast and across the Lakes through out the Mid West.
Further, local governments with present high taxes, fees, permits are in further debt and have looming pensions costs. They are a going hunting, and will either kill off local business and or shake down property owners. Enjoy.
Also, have you noticed cars the last twenty years? They are getting smaller. So too will housing. Couple big maintenance bills, repairs, insurance with higher taxes, a lot of people are questioning the value/cost of the slap dashed McMansion they rattle around in. We've never had so few people live in so much square footage. But, try getting a permit to condoize that McMansion.
As we are planned by our betters into a Euro socialist economy, we will have to have environmentally correct, low carbon foot print housing.
I think there are a lot of steady pressures to flee a lot of housing stock. Taxes, demographics, costs, and low if not negative returns.
I'm voting 'shake down property owners'
Unlike California, most states don't have a limit on property tax increases.
I grew up in a huge (5,000 sqft) WW-I era house that was a money pit.
It sold recently (just past the height of the bubble) for twice what my mom had sold it for 20 years earlier.
But in those 20 years, property taxes on that same house have quadrupled.
I live in about 2000 sqft. now, in the city, and just watched property tax here jump 20% (we revalue every 4 years)
My next move will be outside the city limits at a minimum (to halve the property tax), but probably into a different county (lower rates than here)
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